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The Income Gap Between Natives and Second Generation Immigrants in Sweden: Is Skill the Explanation?

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  • Nordin, Martin

    (Lund University)

  • Rooth, Dan-Olof

    (Stockholm University)

Abstract

This is the first study to use an achievement test score to analyze whether the income gap between second-generation immigrants and natives is caused by a skill gap rather than ethnic discrimination. Since, in principle, every male Swedish citizen takes the test when turning 18, we are able to bring more evidence to bear on the matter by estimating the income gap for a very large sample of individuals who are of the same age and have the same years of schooling at the test date. Once the result of the Swedish Military Enlistment Test is controlled for, the income gap almost disappears for second generation immigrants with both parents born in Southern Europe or outside Europe. However, when using a regular set of control variables the income gap becomes overestimated. This difference in results is most likely explained by the fact that schooling is a bad measure of productive skills for these groups of second-generation immigrants. It indicates that they compensate for their lower probability of being employed by investing in (in relation to their skill level) more schooling than otherwise similar natives.

Suggested Citation

  • Nordin, Martin & Rooth, Dan-Olof, 2007. "The Income Gap Between Natives and Second Generation Immigrants in Sweden: Is Skill the Explanation?," IZA Discussion Papers 2759, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2759
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    Cited by:

    1. Petter Lundborg & Paul Nystedt & Dan-Olof Rooth, 2014. "Height and Earnings: The Role of Cognitive and Noncognitive Skills," Journal of Human Resources, University of Wisconsin Press, vol. 49(1), pages 141-166.
    2. Andersson, Fredrik W. & Burgess, Simon & Lane, Julia, 2009. "Do as the Neighbors Do: The Impact of Social Networks on Immigrant Employment," IZA Discussion Papers 4423, Institute of Labor Economics (IZA).
    3. Roland G. Fryer, Jr, 2016. "The Production of Human Capital in Developed Countries: Evidence from 196 Randomized Field Experiments," NBER Working Papers 22130, National Bureau of Economic Research, Inc.
    4. Martin Nordin & Dan‐Olof Rooth, 2009. "The Ethnic Employment and Income Gap in Sweden: Is Skill or Labor Market Discrimination the Explanation?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(3), pages 487-510, September.
    5. Albrecht Glitz, 2006. "The Labour Market Impact of Immigration: Quasi-Experimental Evidence," RF Berlin - CReAM Discussion Paper Series 0612, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).

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    Keywords

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    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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